New Partnership for Future Car

Two major motor corporation in Japan, Toyota and Suzuki, announced on Wednesday that they began to consider having partnership on technology for information, environment or safety. While Suzuki was negative on maintaining its business as a fully independent and isolated corporation, Toyota wanted new market to compete with other global carmakers. Survival race of motor vehicle companies is going to be more active than ever.

The partnership was offered from Suzuki Chairman, Osamu Suzuki, to former chairman of Toyota, Sho-ichiro Toyoda, last month. In other words, that was a deal by their founding fathers. Following Big 3, Toyota, Nissan and Honda, Suzuki had been weak in developing new technology, including fuel cell vehicle or automatic cruising. After dissolving partnership with Volkswagen, Suzuki had been looking for another partner, based on the notion that independent survival would be hard in the situation of great competition among carmakers.

Investment for new technology is highly expensive. Toyota settled new base for developing artificial intelligence to enhance its technology on automatic cruising in January. As Ford announced that it would develop complete automatic cruising car without steering wheel or accelerator pedal by 2021, Toyota had to be more competitive against its rivals in North America or Europe. Toyota focused on the market of India, where Suzuki has certain dominance with its low-price cars.

In terms of environmentally conscious products, Toyota must be stronger, although it is the first carmaker that sold fuel cell vehicle in 2014. With the trend of laying stricter regulation on emission or volatility of crude oil price, stakes over fuel cell vehicle or hydrogen car is getting high. It also has to have broader partnership to make preferable rules for introducing new technologies in the market.

Profitable business line for carmakers is said to have raised from annual product of 4 million cars in 1990s to 10 million now. Renault-Nissan alliance includes Mitsubishi for greater cooperation. It is Honda that has not made clear of its strategy in the survival race. Some expect broader reform of car-making business beyond borders to be continued.

Toyota and Suzuki seems to be looking at future progress for business partnership, which means for Suzuki to be under Toyota umbrella. While Toyota has included Daihatsu, highly specialized in light car production like Suzuki, there is a concern that Toyota group will be too big in the market of light cars, violating anti-trust legislation. Toyota is going to discuss on the partnership with regulatory section in the government of Japan.